TaxTMI 
TaxTMI 
2026 (1) TMI 466
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.... the AO and Ld. CIT(A) or not ? 2. Whether in the facts and circumstances of the case, the assessee can question the jurisdiction of the AO, in view of the provisions of section 124(3)(a) of the Income Tax Act or not ? 3. Whether in the facts and circumstances of the case, ITO ward 5(2), Kolkata was having jurisdiction to pass the impugned assessment order or the issue is required to be set aside to the record of the Ld. CIT(A) as the same has not been adjudicated by the ld. CIT(A) ? 4. Whether in the facts and circumstances of the case, the Ld. CIT(A) is justified in deleting the addition made by the AO u/s 69A of the Act or not ? 5. Whether in the facts and circumstances of the case, the Ld. CIT(A) is justified in deleting the addition made by the AO on account of other payable s or not ? (A.1) The Hon'ble Accountant Member referred the question of difference to the Hon'ble Third Member as under: "1. Whether on facts and circumstances of the case, the correct jurisdiction of the assessee in the instant case, lies with Assessing Officer situated at Kolkatta or with the Assessing Officer situated at Varanasi ? 2. Whet....
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.... at Rs. 23,42,610/-. According to the AO, ITO, Ward 5(2), Kolkata, the case was selected for scrutiny assessment and a notice u/s 143(2) was issued on 14.08.2018. The ld. AO has passed an ex-parte assessment order u/s 144 of the Income Tax Act on 26.11.2019. In other words, it was an order passed according to the best of judgement of Assessing Officer. Dissatisfied with the assessment order, assessee carried the matter in appeal before the ld. CIT (Appeals) in Varanasi. The ld. CIT (Appeals) decided the appeal in Varanasi vide order dated 23.09.2020. 3. Dissatisfied with the order of ld. CIT (Appeals), Revenue filed an appeal before ITAT bearing ITA No. 135/VNS/2020. On receipt of notice, in the Revenue's appeal, assessee has filed Cross Objections bearing No.04/VNS/2021. The appeal and Cross Objections were heard by the Division Bench on 08.02.2023, however, there was a difference of opinion amongst the Hon'ble Members constituting the Division Bench, hence both the Hon'ble Members have independently framed the questions on difference of opinion. The Hon'ble President has appointed me as a Third Member to resolve the questions. The questions referred by th....
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....d and an enquiry is to be conducted by the Relevant Officers of the department of both the States as is contemplated u/s 124(2), or not? 5. Whether on the facts and circumstances of the case, who was the jurisdictional AO of the assessee on the date of filing return of income and also while concluding assessment? 6. Whether on the facts and circumstances of the case, whether the appellate order passed by Id. CIT(A), Varanasi is sustainable in the eyes of law, keeping in view that the said appellate order was passed in violation of Section 250(1) and 250(2) of the 1961 Act as well in violation of Rule 46A of the Income-tax Rules, 1962? 7. Whether on facts and circumstances of the case, is it fair and appropriate on the part of ITAT, Circuit Bench, Varanasi, to give any findings on the merits of the issues involved in this appeal more so when the appellate order passed by Id. CIT(A) is suffering from incurable defect of being in violation of Section 250(1) and 250(2) of the 1961 Act as well in violation of Rule 46A of the Income-tax Rules, 1962, or not ? 4. The ld. counsel for the assessee has filed detailed written submissions. He has also relied ....
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....39; must include within its sweep, not only the cases pending before the Authorities enlisted under Section 116 of the Act, but also the proceedings before the ITAT as well as a High Court. We are of the opinion that the High Court of Delhi has misread the scope and ambit of Section 127. 26. We will explain this in detail. Section 127 occurs in Chapter XIII of the Act which relates to Income Tax Authorities. In the same chapter, Section 116 enlists the Income Tax Authorities and Section 120 specifies the jurisdiction of such Authorities. While Section 124 specifically speaks of the jurisdiction of Assessing Officers, Section 127 enables a higher authority to transfer a 'case' from one Assessing Officer to another Assessing Officer. All these provisions in Chapter XIII only relate to the executive or administrative powers of Income Tax Authorities. We have no hesitation in our mind that the vesting of appellate jurisdiction has no bearing on judicial remedies provided in Chapter XX of the Act before the ITAT and the High Court. The mistake committed by the High Court was in assuming that the expression "case" in the Explanation to Sub- Section 4 of Section 127 has a....
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....then, by the strength of the very same logic, upon transfer of a case to another Assessing Officer under Section 127, the jurisdiction under Section 260A must be with the High Court in whose jurisdiction the new Assessing Officer is located. A logical extension of this argument is that, once the case is transferred to an Assessing Officer situated outside the jurisdiction of the existing High Court, the entire files relating to the case should now be in the possession and custody of the new Assessing Officer. It could be argued that the Assessing Officer who exercised the jurisdiction before its transfer will not be in a position to assist the High Court, further, he cannot implement the decision of that High Court, after it decides the question of law as he is no more the Assessing Officer. We will now proceed to deal with these arguments. 29. The binding nature of decisions of an appellate court established under a statute on subordinate courts and tribunals within the territorial jurisdiction of the State, is a larger principle involving consistency, certainty and judicial discipline, and it has a direct bearing on the rule of law. This 'need for order' and cons....
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....see or for their own reasons. Though the decision under Section 127 is subject to judicial review or even an appellate scrutiny, this Court for larger reasons would avoid an interpretation that would render the appellate jurisdiction of a High Court dependent upon the executive power. As a matter of principle, transfer of a case from one judicial forum to another judicial forum, without the intervention of a Court of law is against the independence of judiciary. This is true, particularly, when such a transfer can occur in exercise of pure executive power. This is a yet another reason for rejecting the interpretation adopted in the case of Sahara. 32. For the reasons stated above, we hold that the decision of the High Court of Delhi in Sahara and Aar Bee do not lay down the correct law and therefore, we overrule these judgments. 33. In conclusion, we hold that appeals against every decision of the ITAT shall lie only before the High Court within whose jurisdiction the Assessing Officer who passed the assessment order is situated. Even if the case or cases of an assessee are transferred in exercise of power under Section 127 of the Act, the High Court within whose ....
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....ction over the Ld. AO who has passed the impugned order. Therefore, the subsequent change of the jurisdiction of the Ld. AO would not change the jurisdiction of appellate authority to entertain and decide the appeals arising from the order passed by the Ld. AO prior to the change of jurisdiction. Rule 4(1) of the ITAT, Rules 1963 contemplates that the power of the Benches of the Tribunal to hear and determine such appeal and application made under the Act, are as per the standing order amended from time to time till date. It has been directed vide standing order that subject to any special order all appeals and applications from the District, States, Union Territory specified thereunder shall with effect from 1st October 1997, be heard and determined by the benches specified in column no.2 of the table. At serial no.6 of the said table the Kolkata Benches of the ITAT has powers and jurisdiction to hear and determine the appeals from state of West Bangal, Sikkim and Union Territory of Andaman and Nicobar Islands. There is no dispute that ITO, Ward 5(2) Kolkata falls under the territorial jurisdiction of ITAT, Kolkata Benches and therefore, the ITAT, Kolkata Benches have the jurisdic....
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....s non-est as Id. CIT(A) lacks inherent and territorial jurisdiction over the assessment order passed by the ITO, Ward 5(2), Kolkatta. Under these circumstances, we set aside the appellate order dated 23.09.2020 passed by Id. CIT(A), Varanasi. However, we are inclined to give liberty to assessee to file an first appeal with jurisdictional Id. CIT(A), Kolkatta, if so advised, and delay for filing the first appeal by assessee before Id. CIT(A) shall be condoned by jurisdictional Id. CIT(A), Kolkatta, as in our considered view the assessee had under bonafide belief filed and pursuing first appeal with Id. CIT(A), Varanasi, owing to change in the Registered Office from State of West Bengal to State of Uttar Pradesh. Filing of legal proceedings at the correct forum having jurisdiction is the fundamental and cardinal principle and back bone of robust judicial delivery system. Reference is drawn to the decision of Hon'ble! Supreme Court in the case of PCIT v. ABC Papers Limited, reported in (2022) 141 taxmann.com332(SC).The second appeal from the appellate order passed by jurisdictional CIT(A), Kolkatta shall lie with ITAT, Kolkatta Benches, Kolkatta, and an appeal u/s 260Afrom the app....
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....he present appeal is maintainable before ITAT, Varanasi and if Varanasi Bench lacks jurisdiction over the issue, then how it can decide that CIT (Appeals), Varanasi has wrongly entertained the appeal. Instead of setting aside the order of the ld. CIT (Appeals), as done by the ld. AM, the appeal of the Revenue ought to have been dismissed on the ground that Varanasi does not have jurisdiction. This plea could only be entertained by ITAT, Kolkata and only ITAT Kolkata could decide whether impugned order of the CIT (Appeals), Varanasi is valid or without jurisdiction. Once ITAT, Varanasi does not have a jurisdiction to entertain the issue, then nothing could be adjudicated. Similar situation has been faced by ITAT Varanasi on an earlier occasion when ITA No.386/ All/2014 has come up for hearing. The Bench found that territorial jurisdiction of the Tribunal over the assessee in the case of ACIT Vs M/ s Motiwala Industries Ltd. lies in Delhi, hence the Bench has dismissed the appeal with a liberty to the Revenue to prefer a fresh appeal before Delhi Benches, if advised so. I would like to take note of this order of the Division Bench dated 26.09.2023 wherein identical issue is involved.....
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....s been transferred to Varanasi. However, as per the decision rendered by Hon'ble Supreme Court in the above said case, the jurisdiction would continue to be decided on the basis of the jurisdiction of the assessing officer, who passed the order. Accordingly, we are of the view that the revenue should have filed the appeal before the Delhi benches of ITAT. 7. In view of the above, we dismiss the appeal of the revenue on this technical ground. However, the revenue may prefer a fresh appeal before the Delhi benches along with the petition for condoning the delay citing the reasons for the delay in filing before the Delhi benches, if so advised. 8. In the result, the appeal filed by the revenue is dismissed. 9. Order pronounced in the open court on 26.09.2023. Sd/- Sd/- (AMIT SHUKLA) JUDICIAL MEMBER (B.R.BASKARAN) ACCOUNTANT MEMBER Dated 26th September, 2023. 8. In view of the above discussion, I find that after the judgement of Hon'ble Supreme Court in the case of PCIT Vs ABC Papers Limited in Civil Appeal No. 4252 of 2022, the appellate jurisdiction shall be determined on the basis of location of t....
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....29/03/2023 of Hon'ble Accountant Member, and order dated 17/04/2023 of Hon'ble Judicial Member; are reproduced below for the ease of reference: "PER SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER: This appeal, filed by Revenue, being ITA No.135/VNS/2020, is directed against the appellate order dated 26.11.2019 passed by ld. Commissioner of Income Tax (A),Gorakhpur(hereinafter called "theCIT(A)") in Appeal No. CIT(A), Varanasi/10280/2019, for assessment year (ay) 2017-18, the appellate proceedings had arisen before Learned CIT(A) from assessment order dated 23rd September, 2020 passed by learned Assessing Officer (hereinafter called "the AO") under Section 143 r.w.s. 147 of the Income-tax Act, 1961 (hereinafter called "the Act"). We have heard both the parties in Open Court through physical hearing mode. 2. The grounds of appeal raised by Revenue in memo of appeal filed with Income Tax Appellate Tribunal, Varanasi (hereinafter called "the tribunal"), reads as under: "1. On the facts and circumstances of the case and in law, the Ld. CIT(A) has failed to appreciate the facts that the addition of Rs. 2,64,90,092/- made u/s 69A of the I.T. Act, 1961 bec....
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....ry initiation of proceedings by Income-tax Officer, Ward 5(2), Kolkata' by issuance of jurisdictional notice under section 143(2) dated 14.08.2018 was wholly illegal and conclusion of assessment proceedings under section 144, vide order dated 26.11.2019, was liable to be declared as illegal." 5. The brief facts of the case are that the assessee filed return of income for the Assessment Year 2017-18 dated 30th October, 2017 showing returned income of Rs. 23,42,610/-. The case was selected for scrutiny through CASS as far as notice under Section 143(2) on 14th August, 2018 fixing compliance on or before 6th September, 2018 another notice under Section 142(1) was issued on 25th July, 2019, 3rd October, 2019 but there is no compliance of these notices. Thereafter, notice under Section 142(1) dated 25th July, 23019 was issued by the AO asking for the details but again there is no compliance which is as under: "(1) Please substantiate with credible evidence/s Loan from Others amounting Rs. 2,73,59,647/-, Others Payables amounting Rs.30 19 86,328/- as shown by you in the Balance Sheet as on 31.03.2017 of the ITR for the AY - 2017- 18 filed by you. (2) Detail....
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.... the notices u/s 142(1) of the Act/ show cause notice it appears that you do not wish to explain your case. You were requested to substantiate the term loan from others amounting Rs 2,73 59,647/- through this office notice u/s 142(1) dated 25-07-2019 As you have not complied with the notices the loan amount remains unsubstantiated. As per the ITRS filed by you for the A, Y-2016-17 and 2017- 18 it has been observed that you have shown Rs. 8,69,555/- as 'term loans from others' as on 31-03-2016 and Rs. 2,73,59,647/- as term loans from other as on 31-03-2017 Since you have failed to substantiate the term loans from others you are required to explain why the difference amount of Rs 2.64,90,092/- (Rs 2,73,59,647/- minus Rs 8,69,555/-) shall not be treated as unexplained money u/s 69A of the Act and brought to tax u/s 115BBE of IT Act, 1961 which attracts the tax @60% plus surcharge @25% on such tax and cess. You were requested to substantiate the other payables amounting Rs. 30,19,86,328/ through this office notice u/s 142(1) dated 25-07-2019 As you have not complied with the notices the other payable amount remains unsubstantiated. As per the ITRS filed by you....
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.... notices in which it was repeatedly asked to substantiated the term loan from others I have decided to treat the difference amount of Rs 2,64,90,092/- (Rs 2,73,59,6471- minus Rs. 8,69,555/-) as unexplained money u/s 69A of the Act and bring it to tax accordingly. Penalty proceedings u/s 271AAC of the Act is initiated for addition made u/s 69A of the Act. 2. The assessee company was requested to substantiate the other payables amounting Rs. 30,19,86,328/- through this office notice u/s 142(1) dated 25- 07-2019 As the assessee company has not complied with the notices, the other payable amount remained unsubstantiated. As per the ITRS filed by the assessee company for the A.Y-2016-17 and 2017-18 it was observed that it had shown Rs 21,97,16,115/- as 'other payables' as on 31-03-2016 and Rs. 30,19 86,328/ as other payables as on 31-03-2017. Thus it means that fresh liability of at least Rs. 8,22,70,213/- (Rs. 30,19,86,328/- minus Rs. 21,97,16,115/-) arose during the FY 2016-17 and at least this amount of Rs. 8,22,70,213/- had been charged in the P/L Account of FY-2016-17 Since, the assessee company failed to substantiate the other payables even after availing a large ....
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....-18 it was observed that assessee company had shown Rs. 8,69,555/- as 'term loans from others' as on 31.03.2016 and Rs. 2,73,59,647/- as 'term loans from others as on 31.03.2017. Since, assessee company failed to substantiate the 'term loans from others' it was required to explain why the difference amount of Rs. 2,64,90,092/- (Rs. 2,73,59,647/- minus Rs. 8,69,555/-) shall not be treated TRUE COPY as unexplained money u/s 69A of the Act and brought to tax u/s 115BBE of I.T. Act, 1961 which attracts the tax @ 6% plus surcharge @ 25% on such tax and cess, as mentioned in the show cause notice dated 15.11.2019. As the assessee company totally failed in making compliance to the notices u/s 142(1) of the act/show cause notices in which it was repeatedly asked to substantiated the 'term loan from others' I have decided to treat the difference amount of Rs. 2,64,90,092/- (Rs. 2,73,59,647/- minus Rs. 8,69,555/-) as unexplained money u/s 69A of the Act and bring it to tax accordingly. Penalty proceedings u/s 271AAC of the Act is initiated for addition made u/s 69A of the Act, which is factually wrong. The aforesaid (para 1 page 4 of the impugned assessme....
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....Bombay High Court in the case of J.S. Parkar Vs. V.B. Palekar reported in (1973) 94 ITR 616 wherein at page 650 the Hon'ble court observed and held as under :- "Now, it is significant that section 69A speaks of "found to be the owner of ......... bullion .... ... It does not say "found to be in possession, of bullion ......... If the legislature had intended that mere possession of gold, etc., would cast an obligation on the possessor to explain its source it could have very well said so without bringing in the concept of ownership and insisting that the assessee must be found to be the owner. Found by whom? Obviously by the Income-tax Officer and it follows that the finding must be on the basis of proper evidence or material proving such ownership. Again, take the case of "investment" under section 69. Could it be validly contended that the department has merely to allege that an assessee has made an investment, say, in house property or in shares or in bands, without proving the factual existence of such an investment? There must be some starting point. It would be all too easy (and oppressive (sic) for an Income-tax Officer to say to an assessee that "your ....
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....ns that has been referred to in the assessment order itself, for making the said addition of Rs. 8,22,70,213/-. It has been mentioned in the assessment order itself that the sum in question had been charged to profit and loss account, whereas it is no so, from a perusal of the profit and loss account (figure submitted along with return itself), it would be seen that there is no such figure "charged to profit and loss account. It is a law well settled that even where the books of account had not been produced (which is equivalent to "could not be produced") the audited accounts could very well be taken as base, keeping in view the decision of Hon'ble Delhi High Court in the case of Addi. CIT Vs. Jai Engineering reported in (1978) 113 ITR 389 (Delhi High Court), wherein their lordships have observed and held as under :- The Income-tax authorities could, therefore, come to the conclusion that since the auditors were required by the statute to find out if the deductions claimed by the assessee in their balance-sheets and profit and loss accounts were supported by the relevant entries in their account books, the auditors must have done so and must have found that the accoun....
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....tax authorities not only to accept the auditors' report, but also to draw the proper inference from the same. The income-tax authorities could, therefore, come to the conclusion that since the auditors were required by the statue to find out if the deductions claimed by the assessee's in their balance sheets and profit and loss accounts were supported by the relevant entries in their account books, the auditors must have done so and must have found that the account books supported the claims for deductions, when the deductions were disallowed, by the Income-tax Officer on the ground that detailed information regarding them was not available. Justice was not done to the assessee. It was not possible for the assessee's to produce the original account books, which were destroyed in fire. There was, however, other material mainly consisting of the auditors' reports were material. But the question of law is well settled and is not capable of being disputed and does not, therefore, call for reference. The Tribunal has stated that, though, ordinarily, the adjustments relating to expenses should have been made by the assessee in the accounts of the year to which the ad....
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....ection 142 has been issued prior to the making of an assessment under this section. The provisions of this section as they stood immediately before their amendment by the Direct Tax Laws (Amendment) Act, 1987 (4 of 1988), shall apply to and in relation to any assessment for the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year and references in this section to the other provisions of this Act shall be construed as references to those provisions as for the time being in force and applicable to the relevant assessment year. As per the said provision, it was expressly expected from a quasi-judicial authority, as per the status granted to the Assessing Officer by the Act itself, that he should proceed in a reasonable manner and should not proceed arbitrarily, even if he is driven to make 'best judgment assessment' (to make ex-parte assessment). In the present case, he has simply referred to the notices issued from his end which remained uncomplied with (according to him), although there was justification for such a non-compliance at the end of the appellant, the foremost leading being that all such notices were not at all....
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....uate in Bengal or elsewhere, and whether these mills were similarly situated and circumstances. Not only did the Tribunal not show the information given by the representative of the department to the appellant, but it refused even to look at the trunk load of books and papers which Mr. Banerjee produced before the Accountant Member in his chamber. No harm would have been done if after notice to the department the trunk had been opened and some time devoted to see what it contained. The assessment in this case and in the connected appeal, we are told, was above the figure of Rs. 55 lakhs and it was meet and proper when dealing with a matter of this magnitude not to employ unnecessary haste and show impatience, particularly when it was known to the department that the books of the assessee were in the custody of the Sub Divisional Officer, Narayanganj. We think that both the Income tax Officer and the Tribunal in estimating the gross profit rate on sales did not act on any material but acted on pure guess and suspicion. It is thus a fit case for the exercise of our power under Article 136. (Page- 782 & 783). In any case, the appellant begs to submit hereinafter comparative d....
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....23/-) so that income declared in the "return" is accepted and the demand created over and above the same is cancelled. 5c. The ld. CIT(A) partly allowed the appeal of the assessee by holding as under: "Decision: Appellant filed its return of income for the A.Y.- 2017-18 on 30-10-2017 showing returned income Rs. 23,42,610/-. AO asked the appellant to substantiate the 'term loan from others' amounting Rs. 2,73,59,647/- through many notices issued u/s 142(1). Appellant did not comply with any of the notices and so questions asked for by AO remained unsubstantiated. AO rejected the books of accounts u/s 145(3) & made assessment u/s 144 of IT Act after giving specific opportunity to the appellant as required by S. 144. AO for making the best judgment assessment analysed the data from the ITRS for the A.Y.- 2016-17 and 2017-18 where appellant had shown Rs. 8,69,555/- as 'term loans from others' as on 31-03-2016 and Rs. 2,73,59,647/- as 'term loans from other as on 31-03-2017. AO added the difference amount of Rs. 2,64,90,092/- as unexplained money u/s 69A of the Act. Similarly appellant had shown Rs. 21,97,16,115/- as 'other pay....
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.... loss Account' nor were in the nature of cash credit' simplicitor. Such liabilities/ credit balances could not be added to the income of the appellant. I have gone through the facts and the written submissions filed along with the details filed enclose therein. With regards to both the additions made, I agree with the facts given above by the appellant. AO has erred in adopting these figures while making the impugned additions as pointed out by appellant. It is also true that AO gave ample opportunities to the appellant to produce the books of accounts and supporting bills and vouchers for verification, which the appellant failed to comply with. Appellant was not ready to get their books of account examined and get their bills and supporting vouchers verified for the reason best known to them. The A.O may proceed under Section 145(3) under any of the following circumstances: (a) Where he is not satisfied about the correctness or completeness of the accounts; or (b) Where method of accounting cash or mercantile has not been regularly followed by the assessee; or (c) Accounting Standards as notified by the Central Governme....
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....aves consumed per day in each factory and the records relating to the daily collection of CHAAT and MAPARI bidis, the Tribunal has been held correct in holding that the Income Tax Officer was not satisfied about the faimess or correctness of the accounts of the assessee. It is therefore held that the balance sheet shown by the appellant and its profit & loss a/c are to be correctly rejected being unverifiable and unsubstantiated by the appellant. Therefore, in the absence of non- production of books of account, the result in the books cannot be accepted as held by Income Tax Appellate Tribunal Chandigarh Bench in the case of The DCIT Spl. Range vs United Vanaspati Ltd. (2005) 275 ITR 124 Chd; (2004) 83 TTJ Chd 201. The Hon'ble Allahabad High Court in the case of CIT VIS: Surjeet Singh Mahesh kumar (1994) 210 TR 83 has held that in every case of Best Judgment, the element of guess work cannot be eliminated so long as Best judgment has a nexus with material on record and discretion in that behalf has not been exercised arbitrarily or capriciously. I agree with the appellant's submission that a fair estimate of the income has to be made keeping in view surrounding fac....
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....costs." Without commenting on the correctness of these books, it can still be appreciated that the books of accounts are being maintained which were subject to audit during the year as evident from the audit report submitted by appellant. AQ could have used it as a good material to base his assessment. Hon'ble Delhi High Court in the case of CIT vs. Jay Engineering Works Ltd. reported in (1978) 113 ITR 389 wherein their lordships have observed and held as under :- "While the word "evidence" may recall the oral and documentary evidence as may be admissible under the Indian Evidence Act, the use of the word "material" shows that the Income-tax Officer not being a court can rely upon material which may not be strictly evidence admissible under the Indian Evidence Act for the purposes of making an order of assessment Court often take judicial notice of certain facts which need not be proved, while administrative and quasi-judicial authorities can take "official notice" of wider varieties of facts which need not be proved before him. Thus, not only In respect of the relevancy but also in respect of proof the material which can be taken into consideration b....
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....ve relied upon auditors' reports that constitutes relevant material for making assessment. If the books of account maintained by the appellant in accordance with the accepted system of accounting, in the regular course of his business, that have not been accepted by AO, then same books and data shown in them cannot be made the very basis for impugned additions made by AO. There is no accounting standard or statutory provision to tax the difference of closing balance of figures of two F.Yrs. Thus all the additions so made are: made in haste without application of mind and without passing a reasoned order, which is illegal hence the same are liable to be deleted, Appellant has specifically proved that the facts relied upon by AO while calculating the additions made are erroneous. It is well settled legal proposition that AO must pass a reasoned and self- speaking order for expeditious justice in a meaningful manner. This is required because the orders are subject to appeal before higher authorities and courts. Orders passed by an authority without giving sufficient details of facts, applicable law, reasoning are called cryptic orders and such orders pose difficu....
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....ance and closing balance, which translated in the addition to the tune of Rs. 8,22,70,213/-. It was submitted that no explanation was submitted by the assessee on both the issues before the Assessing Officer, and ld CIT(A) ought to have called remand report/comments from the Assessing Officer so that the Assessing Officer should have got an opportunity to examine/verify the claim of the assessee on merits of the additions. Reliance was placed by learned CIT Learned D. R. on section 250(2) of the 1961 Act and Rule 46A of the 1962 Rules. 6b. The Ld. Counsel for the assessee on the other hand submitted before the Bench that the assessee is engaged in the real estate business and it was submitted that the CIT(A) order should be upheld, it was submitted that territorial jurisdiction of ITO, Ward 5(2), Kolkatta who passed the order was vitiated, as the assessee was situated at Varanasi. It was submitted that the notice under Section 143(2) dated 14/08/2018 was issued by the AO situated at Kolkata and hence the assessee was having bona-fide belief that no reply was required to be filed before the AO situated at Kolkata had no jurisdiction to pass assessment order as he is not hav....
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....the Bench drew attention of Id. Counsel for the assessee to provisions of Section 124(3)(a) of the 1961 Act The Id. Counsel for the assessee fairly submitted that the assessee did not challenge the jurisdiction of the ITO Ward 5(2), Kolkatta to frame assessment in the instant case, within one month of the receipt of notice u/s 143(2), dated 14.08.2018, as is stipulated u/s 124(3)(a). It was submitted that the assessee duly received the notice dated 14.08.2018 issued by the AO u/s 143(2) of the 1961 Act. It was submitted that that the assessee changed registered office from West Bengal to Uttar Pradesh, effective from 17.08.2017. The PAN change application for changing address was filed by assessee, on 22.09.2017. Our attention was drawn to page 314/315 of the PB filed by the assessee: The notice u/s 143(2) was issued by AO on 14.08.2018. The objections as to jurisdiction was raised by the assessee before the AO on 29.11.2019, while the AO framed the assessment order on 26.11.2019. It was submitted by Learned counsel for the assessee that the assessee replied to show cause notices on 29th November, 2019 and after receiving the aforesaid reply, the assessment order was passed by the ....
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....ta on. 14.08.2018. It was submitted by Id. Counsel for the assessee that the said notice dated 14.08.2018 was served on the assessee through ITBA system and the address mentioned in the said notice was of the Varanasi (The assessee has not enclosed copy of any of the notices issued by the AO during assessment proceedings). It was submitted that the AO viz. ITO, Ward 5(2), Kolkatta lost jurisdiction of the case much before the issuance of notice under Section 143(2) of the Act on 14th August, 2018. It was submitted that the registered office was shifted on 17.08.2017(Page 314/PB) and the assessment year under consideration is ay: 2017-18 and previous year is 2016-17. It was submitted that the registered office was shifted after the closure of the previous year. It was submitted that return of income was filed on 30.10.2017 and was filed with ACIT, Range 2, on 30.10.2017. It was submitted that ITO, Ward 5(2), Kolkatta issued notice u/s 143(2), on 14.08.2018, and the AO was lacking territorial jurisdiction. It was submitted that monetary limit for the ITO, Ward 5(2), Kolkatta, to frame assessment was where return of income was having income upto Rs. 20 lacs, while the return of income....
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....the assessee filed reply before the AO raising the objection as to jurisdiction of the AO, but by that time assessment order was already passed on 26th November, 2019. It was submitted by Id. CIT DR that digital signatures were affixed by AO on assessment order- on 29th November, 2019, but the assessment order was passed on 26.11.2019. It was submitted that assessment were completed on the system, and even order numbers are generated online through ITBA on 26.11.2019. The assessee filed reply on 29.11.2019 which was only after assessment order was passed on 26.11.2019, and it is only digital signatures which were affixed on 29.11.2019. It was submitted that objections u/s 124(3)(a) could have been raised by the assessee within one month of issuance of notice u/s 143(2). It was submitted by Id. CIT DR that the PAN is linked with AO, Kolkatta It was submitted that the monetary limit for ITO, Kolkatta, to frame assessment is returned income of upto Rs. 30 lacs and not Rs. 20 lacs as stated by Id. Counsel for the assessee. The Id. CIT DR relied upon decision dated 14.07.2022 of Hon'ble Allahabad High Court in the case of Shivaaditya- Jems and Jewellery Private Limited in Writ Tax N....
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....3 to audited financial statements). It was submitted that no reply was filed before AO to satisfy the mandate of Section 68, while Id. CIT(A) deleted the additions based on additional evidence filed by the assessee for the first time before Id. CIT(A) without calling for remand report/comments from the AO. The Id. CIT DR relied upon provisions of Section 250(1) and 250(2) of the 1961 Act, and Rule 46A of the 1962 Rules, and prayers were made that the matter can be restored to the file of the AO for denovo assessment. 6f. The Id. Counsel for the assessee submitted that change in address was duly intimated to department by filing PAN amendment form, which was filed on 22.09.2017. (page 315/PB). The Id. Counsel for the assessee submitted that date of digital signature on assessment order is relevant. It was submitted that reply dated 29.11.2019 was not taken into consideration by the AO while framing assessment order. The Id. Counsel for the assessee submitted that the assessee was located in Varanasi, and hence the monetary limit of Varanasi of returned income upto Rs. 20 lacs will be applicable although it is ITO, Kolkatta who framed the assessment order. It was submitted b....
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....e assessee never responded to the said notices/SCN's, which culminated into an ex-parte assessment order dated 26.11.2019 passed by ITO, Ward 5(2), Kolkatta u/s 144 of the 1961 Act, wherein the income assessed by the AO was Rs. 11,11,02,915/- as against returned income of Rs. 23,42,610/-. The said assessment order was digitally signed by the AO on 29.11.2019, and the assessee has claimed that it filed reply on 29.11.2019 raising challenge to the jurisdiction of the AO to frame assessment, but the said reply was not considered by the AO. The assessee is claiming that its Registered Office stood shifted from the State of West Bengal- to the State of Uttar Pradesh w.e.f. 17.08.2017 vide order of Regional Director, and a certificate of Registration of Regional Director(MCA) order for change of State (PB/Page 314) was issued by Registrar of Companies (MCA) on 01.09.2017.The assessee has claimed that it duly intimated the department by filing change in PAN particulars by intimating change of address from the State of West Bengal to the State of Uttar Pradesh(PB/Page 315). The preliminary challenge is raised to the jurisdiction of the ITO, Ward 5(2), Kolkatta, to frame assessment agai....
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....ovisions of Section 124(1) (a). This requires an application to be made by the assessee for change of jurisdiction of the AO, from State of West Bengal to State of U.P., which will entail an enquiry as to where the principal place of business of the assessee is situated, as now the proposed jurisdiction to State of U.P. falls under the jurisdiction of different Principal Directors General or Director Generals or Directors General or Principal Chief Commissioners or Chief Commissioners or Principal Commissioners or Commissioner concerned, and both the Principal Directors General or Director Generals or Directors General or Principal Chief Commissioners or - Chief Commissioners or Principal Commissioners or Commissioner concerned of the State of U.P. and also of the State of West Bengal have to agree and be at ad-idem that the principal place of business falls under the State of U.P. before any change of jurisdiction of AO is permitted, and then only the AO who shall exercise jurisdiction shall be the AO situated at Varanasi, once an order of change of jurisdiction from AO situated at Kolkatta to AO situated at Varanasi, U.P. was passed by aforesaid Principal Directors General or Dir....
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....n the State of U.P. before the tax-authorities, then in our considered view, the AO situated at Kolkatta who was exercising jurisdiction prior to shifting of registered office of the assessee from State of WB to State of U.P., rightly exercised jurisdiction over the assessee. Further, Section 124(3](a) clearly and unequivocally states that no person shall be entitled to call in question the jurisdiction of the AO, where the return of income has been filed, inter-alia, after the expiry of one month ' from the date when the said person is served with notice u/s 143(2). The assessee has electronically filed return of income on 30.11.2017, and the ITO, Ward 5(2], Kolkatta was the jurisdictional AO. The case of the assessee was selected for framing scrutiny assessment under CASS. The ITO, Ward 5(2), Kolkatta issued notice elated 14.08.2018 u/s 143(2) to the assessee, which was admittedly served on the assessee. On its part, the assessee never challenged the jurisdiction of the ITO, Ward 5(2), Kolkatta, within one month from the date of service of notice u/s 143(2), and hence the assessee is now debarred to raise challenge to the jurisdiction of ITO, Ward 5(2), Kolkatta to pass asses....
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....n our considered view the assessee had under bonafide belief filed and pursuing first appeal with Id. CIT(A), Varanasi, owing to change in the Registered Office from State of West Bengal to State of Uttar Pradesh. Filing of legal proceedings at the correct forum having jurisdiction is the fundamental and cardinal principle and back bone of robust judicial delivery system. Reference is drawn to the decision of Hon'blel Supreme Court in the case of PCIT v. ABC Papers Limited, reported in (2022) 141 taxmann.com 332(SC). The second appeal from the appellate order passed by jurisdictional CIT(A), Kolkatta shall lie with ITAT, Kolkatta Benches, Kolkatta, and an appeal u/s 260A from the appellate order to be passed by ITAT, Kolkatta Benches, Kolkatta shall lie with Hon'ble High Court of Calcutta. So far as merit of the additions are concerned, for the sake of completeness;, we have observed that the assessee did not file any reply before the AO during assessment proceedings to various queries raised by the ITO, Ward 5(2), Kolkatta, aV the assessee never participated in assessment proceedings. The ITO, Ward 5(2), Kolkatta issued several notices and SCNs to the assessee, but none st....
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....er was passed by ITO, ward 5(2), Kolkata therefore, territorial jurisdiction of the appellate authorities including the Income Tax Appellate Tribunal is vested with the Kolkata, Benches under whose jurisdiction the Ld. AO who has passed the assessment order located. The jurisdiction of appellate authorities including tribunal as well as the Hon'ble High Court is determined based on the location of the Ld. AO who has passed the assessment order and therefore, irrespective of the validity of the assessment order the jurisdiction to entertain the appeal against the assessment order lies with the Income Tax Appellate Tribunal having tutorial jurisdiction over the Ld. AO who has passed the impugned order. 4. The Hon'ble Supreme Court in the case of Pr. CIT vs. ABC, Papers Ltd. 447 ITR 1 has analysed the relevant provision of Income Tax in detail and ruled that the appeal against decision of ITAT shall lie before the High Court under whose jurisdiction the Ld. AO who passed the assessment order is situated. The relevant finding of Hon'ble Supreme court in para 25 to 34 is as under: "25. The reasoning adopted by the High Court of Delhi in Sahara is based only....
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....fere with the territorial jurisdiction of the concerned High Court. ..." 27. With a slight digression from the main issue, we may note that the Assessee as well as the Revenue are on the same page in these appeals, taking the view that the decision of the High Court of Delhi in Sahara is not correctly decided. They may be right. However, as there was no serious contest at the bar, the principle suggested by the Assessee as accepted by the Revenue did not suffer strict scrutiny as is always the case in any contested case, and therefore, the Court is left to imagine the contrary proposition in support of the view taken in Sahara. We had no difficulty in conceptualising that, since every judge had once been a lawyer. We have raised and dealt with them in the following paragraphs. 28. Returning to the analyses in the decision in Sahara, we have noticed that the Division Bench of the High Court of Delhi sought to distinguish the two decisions of the very same High Court in Suresh Desai and Digvijay Chemicals on the ground that those cases did not involve the transfer of cases of the very same assessment year. We will reformulate this as a proposition of law. If it is t....
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....ome Tax Act commencing with Assessing Officer, the Commissioner of Appeals, ITAT and finally the High Court under Section 260A must be seen as a lineal progression of judicial remedies. Culmination of all these proceedings in question of law jurisdiction of the High Court under Section 260A of the Act is of special significance as it depicts the overarching judicial superintendence of the High Court over Tribunals and other Authorities operating within its territorial jurisdiction. 31. The power of transfer exercisable under Section 127 is relatable only to the jurisdiction of the Income Tax Authorities. It has no bearing on the ITAT, much less on a High Court. If we accept the submission, it will have the effect of the executive having the power to determine the jurisdiction of a High Court. This can never be the intention of the Parliament. The jurisdiction of a High Court stands on its own footing by virtue of Section 260A read with Section 269 of the Act. While interpreting a judicial remedy, a Constitutional Court should not adopt an approach where the identity of the appellate forum would be contingent upon or vacillates subject to the exercise of some other power. S....
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....ain observations were made stating that the appeals could be filed in the High Court which exercises territorial jurisdiction over the concerned ITAT. These observations are only obiter. In any event they did not preclude the party from filing the appeal before the appropriate High Court where the Assessing Officers exercised jurisdiction. However, we are reiterating for clarity and certainty that the jurisdiction of a High Court is not dependent on the location of the ITAT, as sometimes a Bench of the ITAT exercises jurisdiction over plurality of states. 5. Thus, the territorial jurisdiction of the appellate authority including the High Court shall be determined on the basis of the location of the Ld. AO who passed the assessment order. Thus what is relevant and important is the impugned assessment order and the situs /location of the Ld. AO who passed the impugned assessment order for exercising jurisdiction by appellate authority including the Hon'ble High Court to entertain the appeal arising from the assessment order. Even in the case where after the impugned assessment order is passed the jurisdiction is transferred to other AO at a new location the jurisdiction ....
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....CIT(A) does not arise. Even otherwise the jurisdiction of CIT(A) has not been questioned by either of the parties before us and therefore, no such issue of jurisdiction of CIT(A) is subjected matter of the appeal of the revenue or CO of the assessee. Accordingly, the appeal filed by the department with Varanasi Circuit Bench of the Tribunal is not maintainable for want of jurisdiction and the same is liable to be dismissed. Consequently, the CO filed by the assessee is also not maintainable and liable to be dismissed. The parties have the liberty to avail the appropriate remedies as per law. 6. Ld. AM has given finding on some of the issues arising from the impugned assessment order therefore, for sake of completeness, I am also giving my separate finding on those issues, though ITAT, Circuit Bench Varanasi has no jurisdiction to determine the appeal. 7. The assessee in the cross objections challenged the jurisdiction of the Ld. AO and submitted that once the assessee company has shifted its registered office from Kolkata to Varanasi and applied for change of jurisdiction of PAN of the assessee. Thus the ITO, Ward 5(2) Kolkata has no jurisdiction to assess the ass....
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....ssment, whichever is earlier;" 9. Sub-section (3)(a) prohibits the assessee who has made a return to question the jurisdiction of the Ld. AO after the expiry of one month from the date of service of notice u/s 142(1) or 143(2) or after completion of the assessment whichever is earlier. This restriction as per clause (a) of sub- section(3) is application where a return is filed with the AO who has issued notice u/s 142(1) or 143(2) of the Income Tax Act then the assessee cannot question the jurisdiction of the AO after expiry of one month from the said notice or after the completion of the assessment. If the return of income is filed with AO but the notice u/s 142(1) or 143(2) is issued by another Ld. AO then the restrictions provided under sub-section (3) clause(a) of section 124 would not be pressed into service. The logic of clause (a) of sub-section (3) is simple that once the assessee has surrendered to the jurisdiction of the AO by filing the return of income then he cannot question the jurisdiction of the said AO after the expiry specific time period or event. This restriction the assessee to question the jurisdiction of the AO who has otherwise no territorial jurisd....
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....year." E. On the count of merits confirming the maintenance of accounts in the teeth of accounting standards the Respondents have placed before the Appellate Authority the following grounds: I. There is no accounting standard or statutory provisions to tax the difference of closing balance of figures of two financial years. Thus, all the additions so made are made in a haste, without application of proper mind and without passing a reasoned order, which is illegal hence the same are liable to be deleted. Appellant has specifically proved that the facts relied upon by the AO while calculating the additions made, are erroneous. F. It was also argued that the assessment order was passed in tearing haste, non-speaking and in mechanical manner and a candid examination of the order of the impugned decision would show that the date of the impugned decision was 26.11.2019, and infact the digital signatures was of 29.11.2019. G. The sum and substance of the prayer was that irreparable injury was caused to the Respondent, but for the reason of the decision being ex-parte, being violative of principles natural justice, without balancing the equity and fair ....
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....and all the documents, which passed through the eagle eyes of the CIT (Appeals), were the same documents, which were well with in the hands of the respondent company, carving out that all the documentary evidences, the assessing officer was already seized of the matter and as a fact finding Authority the learned CIT (Appeal), were vested with the powers and did perform the act accordingly, to revaluate all the books of accounts and ledgers to be aligned with the balance sheet, which were part of the proceedings and speaking decision was passed by the CIT (Appeal). IV. Because the learned CIT (Appeals) made a speaking order based on factual and legal position, and summarised " .... it is clear that in this case the order of the AO is erroneous both on the specificness and the accounting entries that the AO thought, this order passed as best judgment for assessment is not supported by any accounting standards or statutorily provisions. In view of the above the additions made by the AO cannot be sustained on any ground. Hence the additions made is deleted. These grounds are allowed. V. Because the respondent crave indulgence of the Hon'ble Bench, to counter the g....
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.... glaring fact, which was brought to the notice of learned CIT (Appeal), thoroughly examined on the factual matrix, that a sum of Rs. 2,64,90,092/-, was added to the income of the Respondent on account of difference between the previous year and the year under scrutiny by the AO, without appreciating the fact that a sum of Rs. 2,73,59,647/-, was taken as a short term loan from Mrs. Babita Agarwal and the same was dully refunded/ subsumed in subsequent financial year. The said addition was made by the AO and taxed under section 69A of the Income Tax Act, without understanding the said provision that amounts not recorded in the books of the account of The Respondent can be brought to tax under this section, whereas this amount was not only dully recorded but also fully disclosed in the books of accounts/ audited balance sheet. That reliance is placed upon the judgment of the Hon'ble ITAT, Bengaluru in the matter of Teena Bethala Vs. Income Tax Officer, vide judgment dated 28.08.2019, wherein it has been stated hereunder: "On a reading of section 694 of the Act, it is clear that the onus is upon the AO to find the assessee to be the owner of any money, bullion, jewellery o....
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....mining the same. 11. Ld. CIT(A) has deleted the addition by considering the factual details which are duly recorded in the books of account and very much part of the financial statements of the assessee company i.e. balance sheet. Since the assessee did not appear before the Ld. AO and questioned the jurisdiction to pass the impugned assessment therefore, the Ld. AO has made the addition on the basis of the entries in the books of account itself and that too under the provisions of section 69A to attract the higher tax @ 60% + surcharge @ 25% on such tax in respect of the term loan. The provision of section 69A of the Income Tax Act reads as under: 69A. Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Income-tax Officer, satisfactory, the mon....
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....ry facts brought on record I do not find any error or illegal in the impugned order of Ld. CIT(A) qua this issue. 13. In the result, appeal of the Revenue in ITANo.135/VNS/2020 and Assesse's CO NO.04/VNS/2021 are dismissed. (A.2.1) On conjoint reading of the aforesaid orders of Hon'ble Accountant Member, Hon'ble Judicial Member and Hon'ble Third Member along with aforesaid Questions of Difference referred to Hon'ble Third Member by Hon'ble Accountant Member and Hon'ble Judicial Member; we find that the Hon'ble Third Member, has held that Varanasi Bench of Income Tax Appellate Tribunal does not have jurisdiction over this appeal and therefore, the present appeal deserves to be dismissed being not maintainable. Hon'ble Third Member has also held that the parties will be at liberty to avail (of) the appropriate remedies, as per law. Hon'ble Third Member has also held that Revenue would be at liberty to approach the appropriate forum at appropriate place, if so advised. Furthermore, Hon'ble Third Member has held that other questions referred to him are academic in nature and redundant in the proceedings of the present appeal; and ....